1. Slide 2.1 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Chapter 2 E-commerce Fundamentals

2. Slide 2.2 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Learning outcomes Evaluate changes in business relationships between organizations and their customers enabled by e-commerce Identify the main business and marketplace models for electronic communications and trading Describe different revenue models and transaction mechanisms available through online services.

3. Slide 2.3 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Management issues What are the implications of changes in marketplace structures for how we trade with customers and other partners? Which business models and revenue models should we consider in order to exploit the Internet? What will be the importance of online intermediaries and marketplace hubs to our business and what actions should we take to partner these intermediaries?

4. Slide 2.4 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Figure 2.1 The environment in which e-business services are provided

5. Slide 2.5 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Activity – the e-commerce environment For each of the environment influences shown in Figure 2.1, give examples of why it is important to monitor and respond in an e-business context. For example, the personalization mentioned in the text is part of why it is important to respond to technological innovation.

6. Slide 2.6 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Environment constraints and opportunities Customers – which services are they offering via their web site that your organization could support them in? Competitors – need to be benchmarked in order to review the online services they are offering – do they have a competitive advantage? Intermediaries – are new or existing intermediaries offering products or services from your competitors while you are not represented? Suppliers – are suppliers offering different methods of procurement to competitors that give them a competitive advantage? Macro-environment Society – what is the ethical and moral consensus on holding personal information? Country specific, international legal – what are the local and global legal constraints for example on holding personal information, or taxation rules on sale of goods? Country specific, international economic – what are the economic constraints of operating within a country or global constraints? Technology – what new technologies are emerging by which to deliver online services such as interactive digital TV and mobile phone-based access?

7. Slide 2.7 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Figure 2.2 B2B and B2C interactions between an organization, its suppliers and its customers

8. Slide 2.8 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 B2B and B2C characteristics CharacteristicB2CB2B Proportion of adopters with access Low to mediumHigh to very high Complexity of buying decisions Relatively simple – individual and influencers More complex – buying process involves users, specifiers, buyers, etc. ChannelRelatively simple – direct or from retailer More complex, direct or via wholesaler, agent or distributor Purchasing characteristicsLow value, high volume or high value, low volume. May be high involvement Similar volume/value. May be high Involvement. Repeat orders (rebuys) more common Product characteristicOften standardized itemsStandardized items or bespoke for sale

9. Slide 2.9 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Figure 2.3 Disintermediation of a consumer distribution channel showing (a) the original situation, (b) disintermediation omitting the wholesaler, and (c) disintermediation omitting both wholesaler and retailer

10. Slide 2.10 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Figure 2.4 From original situation (a) to disintermediation (b) and reintermediation (c)

11. Slide 2.11 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Countermediation Creation of a new intermediary Example: –B&Q www.diy.com –Opodo www.opodo.com –Boots www.wellbeing.com www.handbag.com –Ford, Daimler (www.covisint.com)www.covisint.com Partnering with existing intermediary – Mortgage broker Charcol and Freeserve

12. Slide 2.12 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Figure 2.5 Dave Chaffey’s blog site (www.davechaffey.com)

13. Slide 2.13 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Figure 2.6 Yahoo! Shopping Australia, a price comparison site based on the Kelkoo.com shopping comparison technology (http://shopping.yahoo.com.au)

14. Slide 2.14 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Figure 2.7 Example channel chain map for consumers selecting an estate agent to sell their property

15. Slide 2.15 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Portals Q1. Define portal Q2. Is a search engine the same as a portal? Yes, No Q3. Is a search engine the same as a directory? Yes, No Q4. List search engines / portals you use and explain why

16. Slide 2.16 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Search engines Directories News aggregators MR aggregators Comparers Exchanges Meta services Portal ‘A gateway to information resources and services’

17. Slide 2.17 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Types of portal Type of portalCharacteristicsExample Access portalAssociated with ISPWanadoo (www.wanadoo.com) and now (www.orange.co.uk)www.wanadoo.comwww.orange.co.uk AOL (www.aol.com)www.aol.com Horizontal or functional portal Range of services: search engines, directories, news recruitment, personal information management, shopping, etc. Yahoo! (www.yahoo.com)www.yahoo.com MSN (www.msn.com)www.msn.com Google (www.google.com) for which a long period just focused on search.www.google.com VerticalA vertical portal covers a particular market such as construction with news and other services. Construction Plus (www.constructionplus.co.uk)www.constructionplus.co.uk Chem Industry (www.chemindustry.com)www.chemindustry.com Barbour Index for B2B resources (www.barbour-index.com)www.barbour-index.com E-consultancy (www.e-consultancy.com) Focuses on e-business resourceswww.e-consultancy.com Media portalMain focus is on consumer or business news or entertainment.BBC (www.bbc.co.uk)www.bbc.co.uk Guardian (www.guardian.co.uk)www.guardian.co.uk ITWeek (www.itweek.co.uk)www.itweek.co.uk Geographical (Region, country, local) May be:  horizontal  vertical  Google country versions  Yahoo! country and city versions  Craigslist (www.craigslist.com)www.craigslist.com  Countyweb (www.countyweb.com)www.countyweb.com MarketplaceMay be:  Horizontal  Vertical  Geographical EC21 (www.ec21.com)www.ec21.com eBay (www.eBay.com)www.eBay.com Search portalMain focus is on SearchGoogle (www.google.com)www.google.com Ask Jeeves (www.ask.com)www.ask.com Media typeMay be:  Voice  Video Delivered by streaming media or downloads of files BBC (www.bbc.co.uk)www.bbc.co.uk Silicon (www.silicon.com)www.silicon.com

18. Slide 2.18 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Place of purchaseExamples of sites A. Seller-controlledVendor sites, i.e. home site of organization selling products, e.g. www.dell.com. www.dell.com B. Seller-orientedIntermediaries controlled by third parties to the seller such as distributors and agents, e.g. Opodo (www.opodo.com) represents the main air carrierswww.opodo.com C. NeutralIntermediaries not controlled by buyer’s industry, e.g. EC21 (www.ec21.com).www.ec21.com Product-specific search engines, e.g. CNET (www.computer.com)www.computer.com Comparison sites, e.g. Barclay Square/Shopsmart (www.barclaysquare.com)www.barclaysquare.com Auction space, e.g. eBay (www.ebay.com)www.ebay.com D. Buyer-orientedIntermediaries controlled by buyers, e.g. Covisint used to represent the major motor manufacturers (www.covisint.com) although they now don’t use a single marketplace, but each manufacturer uses technology to access its suppliers direct.www.covisint.com Purchasing agents and aggregators E. Buyer-controlledWeb site procurement posting on company’s own site, e.g. GE Trading Process Network (www.tpn.geis.comwww.tpn.geis.com Online representation

19. Slide 2.19 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Figure 2.8 Variations in the location and scale of trading on e-commerce sites

20. Slide 2.20 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Trading mechanisms Commercial (trading) mechanismOnline transaction mechanism of Nunes et al. (2000) 1. Negotiated deal Example: can use similar mechanism to auction as on Commerce One (www.commerceone.net)www.commerceone.net Negotiation – bargaining between single seller and buyer. Continuous replenishment – ongoing fulfilment of orders under pre-set terms 2. Brokered deal Example: intermediaries such as screentrade (www.screentrade.co.uk)www.screentrade.co.uk Achieved through online intermediaries offering auction and pure markets online 3. Auction Example: C2C: E-bay (www.ebay.com) B2B: Industry to Industry (http://business.ebay.co.uk/)www.ebay.comhttp://business.ebay.co.uk/ Seller auction – buyers’ bids determine final price of sellers’ offerings. Buyer auction – buyers request prices from multiple sellers. Reverse – buyers post desired price for seller acceptance 4. Fixed-price sale Example: all e-tailers Static call – online catalogue with fixed prices. Dynamic call – online catalogue with continuously updated prices and features 5. Pure markets Example: electronic share dealing Spot – buyers’ and sellers’ bids clear instantly 6. Barter Example: www.intagio.com and www.bartercard.co.ukwww.intagio.com www.bartercard.co.uk Barter – buyers and sellers exchange goods. According to the International Reciprocal Trade Association (www.irta.com ) barter trade was over $9 billion in 2002.www.irta.com

21. Slide 2.21 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Business model Timmers (1999) defines a ‘business model’ as: An architecture for product, service and information flows, including a description of the various business actors and their roles; and a description of the potential benefits for the various business actors; and a description of the sources of revenue.

22. Slide 2.22 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Figure 2.9 Priceline Hong Kong service (www.priceline.com.hk)

23. Slide 2.23 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Revenue models – publisher example 1. Subscription access to content. 2. Pay-per-view access. 3. CPM on site display advertising. 4. CPC advertising on site. 5. Sponsorship of site sections, content or widgets. 6. Affiliate revenue (CPA or CPC). 7. Subscriber data access for e-mail marketing. 8. Access to customers for research purposes.

24. Slide 2.24 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Figure 2.10 Alternative perspectives on business models

25. Slide 2.25 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Figure 2.11 Alex Tew’s Million Dollar Home Page (www.milliondollarhomepage.com)

26. Slide 2.26 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Figure 2.12 E-consultancy (www.e-consultancy.com)

27. Slide 2.27 Dave Chaffey, E-Business and E-Commerce Management, 3 rd Edition © Marketing Insights Ltd 2007 Figure 2.13 www.firebox.com